Arizona Republicans Unveil $1.45 Billion Tax Relief Budget After Governor Hobbs Claimed ‘No Plan’ Existed

Arizona Republican lawmakers released a detailed budget proposal this week that they say would spend approximately $800 million less than Governor Katie Hobbs’ plan, while including $1.45 billion in tax relief, according to a release from legislative leadership.

The proposal, advanced by Republican legislative leaders in a Monday press release, is described as a balanced budget that funds core state services while reducing overall spending compared to the governor’s plan.

According to the release, the plan includes provisions to eliminate state taxes on tips and overtime pay, as well as targeted tax relief for families, seniors, and small businesses. Legislative leaders also said the proposal would not require taxpayers to refile their 2025 tax returns.

Republican lawmakers said the $1.45 billion tax relief package is intended to address ongoing inflation and cost-of-living pressures impacting Arizona residents. 

In a joint statement, Arizona House Speaker Steve Montenegro (R-LD29) and Senate President Warren Petersen (R-LD14) outlined the proposal’s structure and fiscal priorities, emphasizing spending restraint alongside tax reductions.

“House and Senate Republicans put forward a serious budget built on facts, not wishful thinking,” Montenegro said. “It delivers major tax relief, eases cost pressures on Arizona families, fully funds core state services, and spends far less than the Governor’s proposal. It does not rely on gimmicks, inflated projections, or money that may never show up to balance the budget. In divided government, responsible leadership means facing the math, making hard choices, and protecting taxpayers. Republicans have done that, putting a workable budget on the table and giving Arizona a clear path to finish the session responsibly. The proposal is ready to move, and so is the Legislature. It is time to pass the bills and deliver for Arizona.”

The release of the budget plan follows a breakdown in negotiations between Republican lawmakers and Hobbs over the state’s fiscal year budget.

As previously reported by the California Globe, Hobbs announced she would veto all legislation sent to her desk after walking away from budget discussions with the Republican-controlled Legislature. 

At the time, Hobbs criticized Republican lawmakers during the dispute over budget priorities and the direction of negotiations, writing on X, “I can’t negotiate with politicians who refuse to show the public their plans.”

Petersen explained, “For months, Governor Hobbs told us full conformity to federal tax relief, including tax cuts for tipped workers, hourly employees, seniors, and small business owners, was impossible. It’s not. Under President Trump, Washington delivered relief for working Americans, and Arizona Republicans are making sure our taxpayers receive those same Trump tax cuts here at home. Republicans balanced the budget with honest numbers, protected core priorities, and provided real relief for families still struggling with higher costs. Arizona is leading the nation as the only state we are aware of advancing the full Trump tax cuts into law. Despite the Governor’s stunts, Republicans stayed at work and got the job done for our citizens.”

Under the Republican proposal, legislative leaders say the plan fully funds core government functions while maintaining what they describe as a responsible spending framework. The release also states that the proposal remains within what lawmakers characterize as a sustainable fiscal structure for the state.

Details provided by legislative leadership indicate the plan prioritizes affordability measures alongside baseline funding for existing state programs. The proposal also outlines an approach focused on limiting new spending growth while implementing tax reductions.

The budget framework was released publicly following internal legislative discussions and was shared through both a formal press release and public statements by Republican leadership. 

Arizona Republicans are delivering a serious, balanced budget for our state that spends about $800 million less than Governor Hobbs’ plan.

This plan cuts taxes, lowers costs for families, and fully funds the core services Arizonans rely on, all while staying within a responsible… pic.twitter.com/cRxSfV4nJ6

— Arizona House Republicans (@AZHouseGOP) April 27, 2026

According to a video statement from Montenegro and Petersen, the proposal includes “One of the largest tax relief packages in Arizona history,” including,

“No state tax on tips, no state tax on overtime, stronger deductions for families and seniors, no need for taxpayers to refile 2025 returns, funding for education, public safety, and child protection,” and “bipartisan priorities and reforms that give Arizona a responsible path to finish the session.”

The proposal now enters the broader negotiation phase between the Legislature and the governor’s office, where differences between competing budget plans must be resolved before a final budget can be adopted.

Arizona lawmakers are required to pass a balanced budget each fiscal year, typically before the start of the new fiscal year on July 1.